Changing Times for Travel Agencies

Before the airline industry was deregulated, travel agencies prospered. Fares were higher, discounts were few. And the agencies made most of their money from vacation travel bookings.

All of this is changing. As the airline business was deregulated, fare wars erupted, more and more airlines failed, or merged, and business travel overtook vacation travel in the area of profit margins.

Now a similar consolidation is happening in the travel agency business. Average commissions per ticket paid to travel agents in 1986 were almost 10% below what they were a year before. And travel agency defaults are at an all-time high; more than 500 agencies failed in 1986.

As a result, the travel agency shakeout is producing only a few successful mega-agencies such as Ask Mr. Foster and Thomas Cook. For many travelers, it's becoming harder and harder to find a good travel agent.

Travelers Concerned

In 1986 American Express fielded a large research project to try to discover what consumers expect from their travel agents. What the company discovered: Travelers are concerned that agents may not always know the range of travel choices available; that many agents lack firsthand knowledge of destinations, and travelers are clearly concerned with who is accountable if they have problems with their trip.

Some agents are not surprised with the survey findings. "It has become more difficult for us to do the kind of job and provide the kinds of services we like to provide," says Carol Dunn-Tompkins, president of Hoffman Travel in Beverly Hills, one of a handful of agencies that still offers a number of personalized services.

Some travel agencies will deliver tickets to clients at their business or home. Hoffman and a few other agencies go a significant step further. Hoffman employs agency representatives who work at major U.S. and foreign airports. The representatives meet clients and escort them through, or around, the usual airport madness. In many cases the airport representatives can get clients into airline VIP lounges or can get them upgraded to business class or first class.

"But all of this costs us money," Dunn-Tompkins says. "And with commissions decreasing and fare structures changing by the minute, it could affect our ability to continue this service."

Specialization the Key

Agencies such as Hoffman will probably be able to continue because they offer these services to a distinct clientele. Other travel agencies that specialize in adventure travel, single travel or senior travel, may also prosper.

American Express has decided to play the upscale travel agent game. It's called Personalized Travel Service, or PTS, and it's offered only to holders of its Platinum American Express Card.

When the Platinum card was introduced in 1984, some critics charged that American Express was issuing it as a marketing gimmick, a card that promised snob appeal and little more.

Platinum cards were offered to American Express card members who had an excellent payment record and who spent a minimum of $10,000 in charges over a consecutive 12-month period. The annual fee for having the card was $250.

Experienced Travelers

What did $250 buy you in 1984? Not much, other than a few raised eyebrows when paying for a restaurant tab or expensive impulse purchase.

But American Express does nothing without research. And the research soon told the company that Platinum cardholders take at least 55 overnight trips each year. "They are experienced travelers," says William Robinson, American Express vice president. "They're not interested in run-of-the-mill eight-day, seven-night package trips."

With Platinum cardholders, American Express had a built-in travel clientele, and last year the company opened its PTS division in Phoenix.

It wrote to its cardholders asking them to provide American Express with a personal travel profile, listing specific needs, preferences and types of services required.

Unlike other travel agencies, the service is open 24 hours a day, and has a toll-free number. Outside the United States travelers can call the PTS collect with just about any travel request imaginable.

Some Wild Requests

And call they do. The PTS office fields more than 10,000 calls each week, and the requests can be quite wild. One PTS member was a few hours away from getting married, and needed to plan his honeymoon--quickly. The PTS counselors found him the appropriate suite in the best hotel, but that wasn't all. Just before the newly married couple checked in, PTS received a frantic phone call from the groom. "He wanted to put a six-foot teddy bear in the bridal suite," says Sue Zeiler, who heads the special services unit for PTS. "And the hotel concierge couldn't help. We found the bear and got it in the room within two hours."

Another PTS member wanted to go just about anywhere for Christmas, as long as the restaurant in the hotel prepared Christmas goose. That took the travel counselors a little longer, but they found a hotel, and a goose.